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eHealth Earnings Preview

eHealth will unveil its latest earnings Tuesday.

eHealth(Nasdaq: EHTH) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings Tuesday. The company offers Internet-based insurance agency services for individuals, families, and small businesses in the United States, as well as technology licensing and Internet advertising services.

What analysts say:

Buy, sell, or hold?: Analysts think investors should stand pat on eHealth with five of nine analysts rating it hold. Analysts like eHealth better than competitor Life Partners Holdings overall. Zero out of one analysts rate Life Partners Holdings a buy compared to four of nine for eHealth. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.

Revenue forecasts: On average, analysts predict $34.2 million in revenue this quarter. That would represent a decline of 5.6% from the year-ago quarter.

Wall Street earnings expectations: The average analyst estimate is earnings of $0.07 per share. Estimates range from $0.04 to $0.09 cents.

What our community says:CAPS All-Stars are solidly backing the stock with 80% giving it an "outperform" rating. The community at large backs the All-Stars with 79.6% awarding it a rating of "outperform." Fools are gung-ho about eHealth, though the message boards have been quiet lately with only 44 posts in the past 30 days. eHealth's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:eHealth's income has fallen year over year by an average of 1.6%. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 4.3 percentage points in the last quarter. Revenue rose 4.4% while cost of sales rose 171.1% to $2.7 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

92.9%

94.6%

97.6%

97.6%

Operating Margin

10.6%

31.7%

12.9%

15.9%

Net Margin

5.3%

17.0%

6.9%

8.4%

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